Many businesses like the idea of having an app. There are also a lot of entrepreneurs who would like to start a business based on a mobile app. In both situations, you need a clear reason for going through the process of developing and then marketing a mobile app.
Some companies, particularly large companies, use mobile apps to build a base of users or for branding purposes.
However, it is usually more important that the app itself makes money. This requires a monetisation strategy. Here are six of the most common.
1. Advertising
If you have good content on your app and lots of people use it, advertising could be a viable option.
There are two main ways you generate money from ads:
- Creating advertising space on your app and then charging businesses and brands to run ads in that space
- Using affiliate marketing where you don’t charge upfront for the ad, but instead get paid whenever someone clicks on your ad and then goes onto make a purchase at the merchant
There are two main types of ad on mobile apps:
- Banner ads – where the ad appears as a small banner, usually at the bottom of the screen
- Interstitial ads – where the ad takes over the entire screen, hiding the content
2. E-Commerce
If you sell products online, you can create a mobile app to give you another sales channel, selling products directly through the app.
3. Freemium Model
The freemium model is one of the most common app monetisation strategies. It involves developing two different versions of your app:
- A slimmed down version which you offer to users for free
- A full version which users have to pay for
The idea is to get people to download and use the slimmed down version. If they like it, they will then upgrade to get the additional features offered on the full version.
This can be a tricky model to get right as you want to make sure people like the free version. There are lots of examples of apps who try this strategy but make the free version so frustrating to use (because they want people to upgrade) that it gets lots of bad reviews.
You need to strike the right balance between leaving enough features that people will think it is worthwhile upgrading, but also ensuring the free version experience is satisfying.
4. Premium Model
The premium model skips over offering users a free version of your app and instead involves having one version that you charge for.
This monetisation strategy sometimes works well when combined with the next one on this list – in-app purchases.
5. In-App Purchases
In-app purchases are when you offer additional features that users have to pay to access. It is a very common strategy in mobile games.
It’s a strategy that can work with a paid-for app (as mentioned above), but it is more common on apps that users can download for free.
6. Subscription
The subscription model, where you charge users to access the features or content of your app, is popular with a range of different types of app, from dating apps to newspapers. For it to work, you need content or features that users will want to access regularly.
Choosing the Right Monetisation Strategy
Each of the monetisation strategies outlined above is best used in certain situations. Finding the right one for your business is an essential part of the development planning process.